Working on Student Loan Dischargability

May 29, 2018 by

Working on Student Loan Dischargability

Student loan debt spirals out of control, with 44 million Americans owing more than $1.5 billion in student loan debt. This crisis is exacerbated by the fact that since 1998, student loan debt can only rarely be eliminated through bankruptcy. However, in February 2018, the Department of Education published an invitation for comments and suggestions on student loans and bankruptcy hardship discharges.

The work of Gold & Hammes doesn’t end at the doors of the office. The firm has over twenty-five years of experience contributing to legislation and policies aimed and alleviating the burden of debtors. As a member of the Legislative Committee of the National Association of Bankruptcy Attorneys, Norma Hammes led NACBA’s effort in drafting its comment letter urging the Department of Education to release data and simplify the undue hardship analysis.

The aim is of this request is to use the data collected to run a cost-benefit analysis on the current practices used by the Department of Education to collect delinquent student loans. NACBA suspects that analysis of this data will show that current processes incur high operational costs that outweigh the return on a large portion of delinquent student debts.

The short-term goal? “Starting the conversation in a more substantive way,” said Hammes, “because data has been so scarce in the last fifteen to twenty years.”

For more details, NACBA’s full letter can be found here: https://www.regulations.gov/document?D=ED-2017-OPE-0085-0366

This letter was one of many submitted on the subject, including a letter from 77 members of Congress, which expresses concerns similar to NACBA’s. The full letter can be found here: https://www.regulationpps.gov/document?D=ED-pp2017-OPE-0085-0400

This is just one step towards an array of possible solutions to the looming student loan crisis. While Congress is not likely to immediately pass legislation on the subject, it is certainly within the Department of Education’s power to improve its internal procedures to could alleviate the burdens for whom student loans are creating undue hardships.

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